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Table of Contents
Abstract................................................................................................................ 7
CHAPTER 1: INTRODUCTION.................................................................................. 8
1.1 Definitions................................................................................................... 8
1.1.1 Joint Venture (JV):................................................................................ 8
1.1.2 International Joint Venture (IJV):.......................................................... 8
1.1.3 Partner-Related Criteria ....................................................................... 8
1.1.4 Task-Related Criteria............................................................................ 8
1.1.5 Analytic Hierarchy Process (AHP) ......................................................... 8
1.2 Statement of the Problem........................................................................... 9
1.3 Objectives of the study................................................................................ 9
1.4 Significance of the Study ............................................................................. 9
1.5 Scope and Limitations ................................................................................. 9
1.6 Background............................................................................................... 10
CHAPTER 2: LITERATURE REVIEW .........................................................................11
2.1 Past Studies on IJV and JV Partner Selection.............................................. 11
2.2 Past Studies on AHP Modeling in Partner Selection................................... 15
2.3 Selection Criteria....................................................................................... 16
CHAPTER 3: RESEARCH METHODOLOGY...............................................................18
3.1 Step 1: Identify the Selection Criteria ........................................................ 18
3.2 Step 2: Data Collection Using a Survey Questionnaire ............................... 19
3.3 Step 3: Population and Sampling............................................................... 19
3.4 Step 4: Data Analysis................................................................................. 19
3.4.1 Mean ................................................................................................. 20
3.4.2 Mode ................................................................................................. 20

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3.4.3 Standard Deviation............................................................................. 20
3.4.4 Weighted Percentile........................................................................... 20
3.4.5 Criteria Importance Determination .................................................... 21
3.5 Step 6: Building the AHP Model................................................................. 21
3.5.1 Structuring the problem..................................................................... 22
3.5.2 Data Collection and Measurement..................................................... 24
3.5.3 Determining Normalized Weights ...................................................... 24
CHAPTER 4: DATA ANALYSIS AND FINDINGS.........................................................26
4.1 Questionnaire Response ........................................................................... 26
4.2 Total Sampling .......................................................................................... 27
4.2.1 Mean, Mode, Standard Deviation....................................................... 27
4.2.2 Percentile and Importance Determination ......................................... 29
4.2.3 Top 10 Ranking................................................................................... 31
4.3 Family Companies Sampling...................................................................... 32
4.3.3 Top 10 Ranking................................................................................... 36
4.4 Joint Venture (IJV’s) Companies Sampling ................................................. 37
4.4.3 Top 10 Ranking................................................................................... 41
4.5 International Companies Sampling............................................................ 42
4.5.3 Top 10 Ranking................................................................................... 46

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4.6 General Data Analysis of Results ............................................................... 47
4.6.1 Average Percentile ............................................................................. 47
4.6.2 Top Ranked Partner Related Criteria .................................................. 47
4.6.3 Top Ranked Task Related Criteria....................................................... 48
4.7 AHP Model Calculations ............................................................................ 49
4.8 Creating the AHP Model............................................................................ 51
CHAPTER 5: CASE STUDY ......................................................................................54
CHAPTER 6: CONCLUSIONS AND RECOMMENDATIONS.........................................55
6.1 Summary of the Study............................................................................... 55
6.2 Findings..................................................................................................... 55
6.3 Recommendations .................................................................................... 56
6.4 Going Forward .......................................................................................... 56
REFERENCES ........................................................................................................57
Appendix A – Research Questionnaire..................................................................59

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List of Tables
Table 1 - Ranking of Ali K. Alkhalifa and S. Effert Peterson (1999)............................ 12
Table 2 - Summary of Criteria from Literature Review............................................. 16
Table 3 - Likert Scale Used in Questionnaire............................................................ 19
Table 4 - Weight of Scale Points............................................................................... 20
Table 5 - Sample calculation for ranking .................................................................. 21
Table 6 - Criteria Importance................................................................................... 21
Table 7 - The Saaty Rating Scale............................................................................... 24
Table 8 - Random Consistency Index (RI) ................................................................. 25
Table 9 - Questionnaire responses by market Segment ........................................... 26
Table 10 - Questionnaire responses by position ...................................................... 26
Table 11 - Partner Related Criteria Total Sampling (Mean, Mode, Standard Deviation)
................................................................................................................................ 27
Table 12 - Task Related Criteria Total Sampling (Mean, Mode, Standard Deviation) 28
Table 13 - Partner Related Criteria Total Sampling (Percentile & Importance
Determination)........................................................................................................ 29
Table 14 - Task Related Criteria Total Sampling (Percentile & Importance
Determination)........................................................................................................ 30
Table 15 - Partner Related Criteria Total Sampling (Top 10 Ranking) ....................... 31
Table 16 - Task Related Criteria Total Sampling (Tope 10 Ranking) .......................... 31
Table 17 - Partner Related Criteria Family Sampling (Mean, Mode, Standard
Deviation)................................................................................................................ 32
Table 18 - Task Related Criteria Family Sampling (Mean, Mode, Standard Deviation)
................................................................................................................................ 33
Table 19 - Partner Related Criteria Family Sampling (Percentile & Importance
Determination)........................................................................................................ 34

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Table 20 - Task Related Criteria Family Sampling (Percentile & Importance
Determination)........................................................................................................ 35
Table 21 - Partner Related Criteria Family Sampling (Top 10 Ranking) ..................... 36
Table 22 - Task Related Criteria Family Sampling (Tope 10 Ranking)........................ 36
Table 23 - Partner Related Criteria Joint Venture (IJV’s) Sampling (Mean, Mode,
Standard Deviation)................................................................................................. 37
Table 24 - Task Related Criteria Joint Venture (IJV’s) Sampling (Mean, Mode,
Standard Deviation)................................................................................................. 38
Table 25 - Partner Related Criteria Joint Venture (IJV’s) Sampling (Percentile &
Importance Determination)..................................................................................... 39
Table 26 - Task Related Criteria Joint Venture (IJV’s) Sampling (Percentile &
Importance Determination)..................................................................................... 40
Table 27 - Partner Related Criteria Joint Venture (IJV’s) Sampling (Top 10 Ranking) 41
Table 28 - Task Related Criteria Joint Venture (IJV’s) Sampling (Tope 10 Ranking)... 41
Table 29 - Partner Related Criteria International Sampling (Mean, Mode, Standard
Deviation)................................................................................................................ 42
Table 30 - Task Related Criteria International Sampling (Mean, Mode, Standard
Deviation)................................................................................................................ 43
Table 31 - Partner Related Criteria International Sampling (Percentile & Importance
Determination)........................................................................................................ 44
Table 32 - Task Related Criteria International Sampling (Percentile & Importance
Determination)........................................................................................................ 45
Table 33 - Partner Related Criteria International Sampling (Top 10 Ranking)........... 46
Table 34 - Task Related Criteria International Sampling (Tope 10 Ranking).............. 46
Table 35 - Summary of average percentile............................................................... 47
Table 36 - Partner related criteria ranking comparison............................................ 47
Table 37 - Task related criteria ranking comparison................................................. 48

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Table 38 - Level 2 “Criteria Types” Pairwise Matrix.................................................. 49
Table 39 - Level 4 "Liberatore Rating Scale" Pairwise Matrix.................................... 49
Table 40 - Level 3 "Partner-Related Sub Criteria" Pairwise Matrix............................ 50
Table 41 - Level 3 "Task-Related Sub Criteria" Pairwise Matrix ................................ 50
Table 42 - Global weight for Sub-criteria ................................................................. 51
Table 43 - Ranking of sub-criteria based on global weights...................................... 52
Table 44 - Final AHP model...................................................................................... 53
Table 45 - Final score range..................................................................................... 53
Table 46 - Case study response for AHP model........................................................ 54

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Abstract
This paper analyses the possible different selection criteria of International and
Local companies creating joint ventures in Saudi Arabia. Then using an AHP (Analytic
Hierarchy Process) method a model will be developed based on the data analysis of
the criteria. With Saudi Arabia being one of the most sustainable economies and
markets worldwide, there is an increase of international companies looking to
expand their operations into Saudi Arabia, whether regional or international.
Although SAGIA (Saudi Arabian General Investment Authority) facilitates foreign
investment on its own, there remains to be seen a growth in Joint Ventures in the
country. Two types of criteria critical to partner selection are partner-related and
task-related factors. The criteria used in the survey were identified through literature
review and interviews of business professionals in Saudi Arabia. A total of 19 factors
for each factor type where selected for analysis in the survey. The survey was
distributed to more than 50 professionals from family, IJV’s and international
organizations. Based on the total sampling, it was found that Partner-related criteria
are marginally more important than Task-Related criteria. Partner-related criteria’s
“Trust between management teams” and “Reputation and identity of the partner”
were top 2 priority in the model followed the task-related criteria “Commitment to
joint venture”. Based on the survey findings an AHP model was developed.

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CHAPTER 1: INTRODUCTION
1.1 Definitions
1.1.1 Joint Venture (JV):
A joint venture is a business agreement in which parties agrees to develop, for a
finite time, a new entity and new assets by contributing equity. They exercise control
over the enterprise and consequently share revenues, expenses and assets.
1.1.2 International Joint Venture (IJV):
International joint venture is when one of the partners is based outside the
country where the venture is taking place, or if the joint venture covers more than
one country.
1.1.3 Partner-Related Criteria
The variables that is relevant when selecting an investment partner. They are
criteria that describe the partners internally, their status and most importantly the
partner’s compatibility.
1.1.4 Task-Related Criteria
The variables that is related to the market and required for the joint venture
success. Such variables cover the operational skills and resources of the partners in
the targeted market.
1.1.5 Analytic Hierarchy Process (AHP)
It is a structured technique for organizing and analyzing complex decisions. It has
particular application in group decision making and is used around the world in a
wide variety of decision situations, in fields such as government, business, industry,
healthcare, and education. Rather than prescribing a "correct" decision, the AHP
helps decision makers find one that best suits their goal and their understanding of
the problem. It provides a comprehensive and rational framework for structuring a
decision problem, for representing and quantifying its elements, for relating those
elements to overall goals, and for evaluating alternative solutions.

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1.2 Statement of the Problem
In Saudi Arabia most local groups have businesses over many sectors and do not
have a systematic, formulated process with specific criteria selection when looking
for new joint ventures. Considering that the Saudi Arabian market is difficult for
international companies operating solely, many opt to enter into joint ventures with
the local groups. Most family owned groups in Saudi Arabia, have limited resources
in developing new business and joint ventures and so it is vital that the group has a
structured approach to partner selection in order to maximize their resources.
The research intends to create an AHP model through analyzing the selection
criteria considered in joint venture and partner selection within Saudi Arabia.
1.3 Objectives of the study
The following are the main objectives of the research:
• Identifying the main selection criteria considered by local and international
organizations in Saudi Arabia.
• Building an AHP model based on the analysis of the criteria survey.
1.4 Significance of the Study
The research will help understand why international companies choose to enter
into JV’s/Partnerships rather than registering through SAGIA as a sole Entity. The
model will help local organizations to analyze future joint ventures with a clear
selection process. This will help maintain unbiased standards in partner selection
and allow the organization to effectively allocate time and human resources to
potential joint ventures. The model will ultimately allow local organizations to be
more efficient in their joint venture business process, as well as higher success rate.
1.5 Scope and Limitations
The research will be focused on the Saudi Arabian market with emphasis to the
construction sector. Selection criteria will be reviewed and assessed through the
literature review and one-on-one interviews with professionals. The survey will be
completed by professionals in both local and international organizations operating in

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Saudi Arabia. Given the geographic span, most focus will be on companies from the
Eastern Region for the local companies. The population targeted is considered a
sample of the whole ensuring various backgrounds and experiences of sample.
1.6 Background
With the recent economic global crisis, Saudi Arabia has proven to be one of the
most stable economies with sustainable growth based on real demand. Thus, the
market is realizing a change of business dynamics with increased potential
opportunities. The Kingdom is open to foreign investment in most sectors, with the
exception of several industries (e.g. upstream oil exploration). Saudi Arabia has
placed many efforts to ease regulatory restrictions and to reform the tax system,
moving it to a highly competitive position in the World Bank’s annual Doing Business
rankings.
Saudi Arabia’s key economic priorities are job creation and the diversification of
its oil-dependent revenues. Thus, the Saudi Arabian General Investment Authority
(SAGIA) is commissioned to undergo a multi-billion dollar development strategy
centered on the building of Greenfield economic cities and industrial zones through
the country. These developments are intended to attract foreign and domestic
investment into the downstream energy, transport and knowledge-based sectors. In
addition to accepting foreign investment, the government plans to spend USD385
billion on infrastructures and human resource development from 2010 to 2014.
Despite the Kingdom’s effort to facilitate for international companies to enter
the Saudi Market on their own through the “Saudi Arabian General Investment
Authority” (SAGIA), the local legal system is considered slow-moving and biased
against foreign firms lacking a strong local connection which is a key obstacle for
investors. Therefore, there remains to be a large number of Joint-ventures being
registered between international and local companies
The quickest way for international companies to penetrate the Saudi market is to
setup a joint venture or acquire a local company. Simultaneously, local companies
are in continuous search for new technologies and services that may be provided to
the local markets whether niche or typical to expand their businesses. A main

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strategy of local groups in their growth is to expand the businesses through joint
ventures with renowned international companies providing a specialty service to the
Saudi Arabian Market. The success rate of these joint ventures is still considered as
being low.
CHAPTER 2: LITERATURE REVIEW
Various studies worldwide have been completed for many years covering the
same topic. To keep relativity to the current research, it was decided to select
articles where studies were in the region. However, not many studies were done in
the region and so other papers were used in the literature review.
2.1 Past Studies on IJV and JV Partner Selection
Geringer (1988) make an important contribution to the literature of partner
selection with his two-fold typology of the partner selection criteria. He suggested
that it is possible to categorize the unlimited range of alternative criteria between
“task-related” and “partner-related”. Task-related selection criteria was defined as
the ones associated with the strategic resources and operations skills that a venture
requires for its competitive success, and are concerned with an achievement of
strategic fit between the partners. Whereas, partner-related selection criteria are
more cooperation-related with a focus on how partnering firms can work together
effectively and efficiently.
The closest study carried out to Saudi Arabia was in Bahrain by Ali K. Alkhalifa
and S. Eggert Peterson (1999). The study highlights the importance to distinguish
between partner-related and task-related factors in analyzing the partner selection
process in Bahrain. Based on the survey of 43 international joint ventures in Bahrain,
partner-related factors were rated as much more important than task-related factors
in the partner selection process. The study ranks the selection criteria as follows:

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Table 1 - Ranking of Ali K. Alkhalifa and S. Effert Peterson (1999)
Rank Criteria
1 Reputation in Bahrain Market
2 Financial status
3 Similar goals, objectives, aspirations
4 Enthusiasm and commitment to product
5 Contacts in Bahrain market
6 Compatible organization
7 Knowledge of host/local market
8 Ability to cover territory
9 Prior trade relationship
10 Technical competence
11 Adequate staff level to market effectively
12 Recommendation by bank, government, etc.
13 Previous JV success
14 Prior JV experience
The authors summarized these results by saying that the more sophisticated the
company and the CEO, the greater emphasis it places on partner-related factors, and
less on purely task-related factors. The paper also indicates numerous limitations of
their research which may suggest the direction of further study. The limitations and
proposed further studies are as follows:
• Further research should expand the sectors covered as this study only
included the manufacturing industry in Bahrain
• May be important that research be carried out among international JV in
other host environments.
• Would be important for future research to place special emphasis on the
issue of motivation as compared with the decision of the partner.
• It would be useful to examine the dimensional constructs in greater detail to
verify or clarify the type of the factors involved in the partner decision
process which we have identified.

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• It would be important for future research to focus on how the significance of
partner-related factors varies with the experience and characteristics of the
company, and with the personal characteristics of the CEO.
A further study by AkremTatoglu (2000) focused on important issues related to
the motivation and partner selection of western companies to create joint ventures
in Turkey from the western point of view. Main motivating factors concluded were
linked to the market and geographical expansion of the firm. The western firms saw
important reasons for using a joint venture approach was as follows:
• Achieving presence in new market (i.e. local company size, reputation,
etc.)
• Enabling quick market entry (i.e. footprint, business network, etc.)
• Hedging potential risk of doing business in Turkey (i.e. local market
knowledge)
AkremTatoglu (2000) has also investigated aspects of selection criteria in
Western joint ventures formed by local partner firms in Turkey by distinguishing
between partner-related selection criteria and task-related selection criteria. The
most important partner-related criteria for the sample of JVs are partner's
knowledge of local market, trust between top management teams, reputation of
partner and partner's ability to negotiate with Turkish Government. The most
important task related selection criteria for this sample of JVs are access to
knowledge of local market, access to knowledge of local culture and access to
distribution channels.
Apart from some few exceptions, the majority of partner selection criteria
are found not to vary with the nationality of the foreign partner, indicating that the
nationality of the foreign partner is not instrumental in choosing local partners for
this sample of Western JV’s in Turkey.
JariVaris and Steffen Conn (2002) stated that the number of alliances (i.e.
joint ventures) continues to grow worldwide, but the success rate is widely cited as
being low. Partner selection is one of the most critical steps in the establishment of
JV’s. Thus developing “partner selection skills” is important for the JV success; and

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applying more analytic and systematic methods in the selection process could
increase the success rate of the JV.
They looked at theory-driven approaches in analyzing partners which continues
to be a multi-disciplinary affair. Some of the approaches can be classified under the
economic theory viewpoint (e.g. transaction cost theory, agency theory, market
power theory, and the resource based view. Other popular approaches might be
classified under the organization theory banner (e.g. resource dependency theory,
organizational learning). Alternatively, sociological perspectives (e.g. social network
theory and embedded-ness) could be invoked as a theoretical basis for alliance
partner selection.
Another study in Turkey by DilberUlas (2005) examines the motives for IJV’s in
high-tech industries in Turkey. This is considering that in 2003 as per the Turkish
treasury, the most popular strategy into entering the Turkish Market was through
100% foreign investment, followed by establishing Joint Ventures. His study
concluded that there were significant difference in the motives and expectations of
the Turkish and foreign partners in establishing IJV’s. The study showed that there is
no significant disparity between Turkish and foreign partners partner selection
criteria which generally supports existing theories and research.
A slightly more focused research done by Jean-Paul Roy and Christine Oliver
(2009) was to investigate the influence of the host-country legal environment in IJV
partner selection. Based on the past research, this study was the first to develop and
test empirically a model for IJV partner selection. The results of the test supported
the importance of partnering skills in choosing IJV partners and the value of
conceptual differentiation between task- and partner-related criteria in the IJV
formation business process.
It is clear from the literature review that the selection criteria’s are mostly the
same regardless of which country the study was done and for what purpose.
However, the priority of the criteria differs mainly from one country to another. As a
professional in the industry, the change in priorities seems to be due to the
difference in dynamics and regulations in each country even if they were neighboring
countries. For example, Dubai having less barrios of entry and consists mostly of

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international companies, the need for a local partner would not be as high as in
Saudi where market contacts and knowledge is very key to the success of most
businesses.
2.2 Past Studies on AHP Modeling in Partner Selection
SeziCovikOnar and SeckinPolat (2009) constructed a model based on the idea
that strategic options should be considered through multiple criteria decision making
methods. Strategic option selection is a complex problem where qualitative
attributes must be taken into consideration which makes the evaluation process
difficult. Therefore, using AHP is a good approach for such complicated systems as it
has the ability to make pairwise comparisons of the attributes in a hierarchical
structure.
It was concluded that for further research a sensitivity analysis can be utilized in
order to check the robustness of the model. Also a model which includes the
internal factors can be utilized.
Another study by Mehdi Ravanshadnia, Hamid R. Abbasian and HosseinRajaie
(2012) highlights that EPC partner selection is one of the key success factors of a
joint venture. The development of a quantitative method helps practitioners in
logical decision making. Based on the findings of the research, main influencing
criteria were as follows:
• Partner’s financial capability (PFRMC)
• Partners experience (PFNP)
• Partners reputation and being known by the client (PRCC)
• Partner relationship with the contractor/client (PRC)
• Partner engineering and supervision proposed prices (PPCF).
This model applies a mathematical selection criteria decision making method for
partner selection. It sets up a hierarchy structure of the decision criteria and
develops a fuzzy analytical hierarchy process (AHP) model for the analysis of the
potential engineering companies to be selected for a partner/JV. The paper

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concluded that the fuzzy AHP model is effective in the selection of engineering
partner for EPC projects.
The authors proposed future researchers to develop a user-friendly decision
support system (DSS) based on their proposed model allowing it to be more
applicable for practical usages.
2.3 Selection Criteria
The below table summarizes the selection criteria as collected from the literature
review. It was clear that many criteria’s were repeated regardless of when or where
the past study was conducted.
Table 2 - Summary of Criteria from Literature Review
Reference Partner-related criteria Task-related criteria
Tatoglu, E.,
(2000).
• Partners knowledge of local
market
• Trust between top
management teams
• Reputation of partner
• Partners ability to negotiate
with government
• Compatibility of top
management teams
• Quality of partners
management team
• Financial status/resources of
partner
• Size of partner
• Favorable past association
• Established market and
distribution system
• Relatedness of partners
business
• Complentarity of partners
resource contribution
• Experience in technology
applications
• Partners ability to raise funds
from local institutions
• International experience
• Access to knowledge of
local market
• Access to knowledge of
local culture
• Access to distribution
channels
• Access to regulatory
permits
• Access to labor
• Access to capital
• Access to materials/natural
resources
• Access to technology
• Access to product itself

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Al-Khalifa, A.,
and Peterson,
S. E. (1999).
• Reputation in Bahrain market
• Financial status
• Similar goals, objectives,
aspirations
• Enthusiasm and commitment
to product
• Contracts in Bahrain market
• Compatible organization
• Knowledge of host/local
market
• Ability to cover territory
• Prior trade relationships
• Technical competence
• Adequate staff level to market
effectively
• Recommendation by bank,
gov’t, etc.
• Previous JV success
• Prior JV Experience
Onar, S. C.,
and Polat, S.
(2009)
• Firms performance
• Firm size
• Firms diversification level
• Firms R&D intensity
• Partners similarity
• Prior experience
• Industry uncertainty
• Industry generosity
• Industry size
• Industry concentration
Varis, J.,
Kuivalainen,
O., and
Saarenketo, S.
(2003).
• Partner commitment to co-
operation
• Complementing customer base
• Complementing partnership
network
• Partnerships with competitors
• Complementing products
and/or services
• Strong global market
footprint
• Business potential (long-
term)
• Strategic importance
• Short and mid-term
revenues
Roy, J., and
Oliver, C.
(2009).
• Transparency of firm and/or
ethical values/beliefs
• Reputation
• Goals, objectives, aspirations,
or synergy potential
• Commitment, seriousness
and/or enthusiasm for the
partnership
• Favorable past association with
the focal firm or mutual
acquaintances
• Ability to satisfy host
government requirements
• Connections to government
or non-government
organizations
• Regulatory permits,
licenses, or patents
• Facilities
• Managerial and/or labor
skills
• Raw materials/natural
resources, products,
services, and/or technology

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Ulas, D.
(2005).
• International prestige
• Establishing trust
• Having technology
• Willingness about transferring
knowledge and capabilities
• Harmony in business approach
and strategies
• Heaving resources other firms
needs
• Experience about international
project management
• Financial situation
• Firm size
• Experience about IJV forming
• Prior business relationships
• Knowledge of local market and
conditions
• Good relationship with
government
• Obtaining labor
• Connection with Turkish
government
• Forming distribution
network
• Physical evidence
• Material procurement
• Planning and developing
marketing techniques
• Communication with
finance institutions
Varis, J., &
Conn, S.
(2002),
• Family or non-family owned
• Favorable past association
• Facilities
• Resources
• Local identity
• Financial status
• Business compatibility between
partners
• Compatible ethics
• Common goals
• Established
marketing/distribution
system
• Suitably sized sales force
• Ability to negotiate with the
government
• Experience in service
applications
CHAPTER 3: RESEARCH METHODOLOGY
The following section discusses the questionnaire, sampling and analysis
methods used in the research. Please refer to “Appendix A – Questionnaire”.
The research will be conducted in the following steps:
3.1 Step 1: Identify the Selection Criteria
The selection criteria will be identified through conducting thorough literature
review where certain criteria’s have previously been identified. Also input from
current market experience and professional input will identify the common factors
to be considered when selecting a partner for joint ventures.

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3.2 Step 2: Data Collection Using a Survey Questionnaire
The questionnaire will be built using 19 sub-criteria’s for each partner and task
related main criteria. The survey will be conducted with appropriate organizations
and professionals in Saudi Arabia to identify the importance of the criteria
The questionnaire was designed, with responses to be scored on a five points
Likert scale; 1=”unimportant”, 5=”critical”. Through the interviews it was expressed
that the survey was to use an easy to understand method of measurement to avoid
error in personal judgment or misunderstanding to the question. More accurate
scales were reviewed for use in the survey, but they require more time and are much
more difficult to apply for this research.
Table 3 - Likert Scale Used in Questionnaire
1 Unimportant 2
Slightly
important
3 Important 4
Very
Important
5 Critical
3.3 Step 3: Population and Sampling
The survey, prepared with a brief cover page, was sent to 50+ professionals from
the following types of organizations operating in Saudi Arabia:
• Local family-owned holding companies
• IJV’s existing in Saudi Arabia
• International organizations that have an operating JV in Saudi Arabia, or are
currently looking to establish a joint venture in the Kingdom.
The targeted respondents from the above organizations had to be those with
experience in the matter subject or were involved in the business process of partner
selection for Joint venture, temporary or permanent. Such employees include
owners, business development managers, sector heads and investment/finance
managers.
3.4 Step 4: Data Analysis
Statistical analysis methods will be used in analyzing the collected data through
the questionnaire. The various analyses to be used are defined as follows:

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3.4.1 Mean
The average of n numbers computed by adding some function of the numbers
and dividing by some function of n.
3.4.2 Mode
The value that appears the most often in a set of data.
3.4.3 Standard Deviation
Shows how much variation or "dispersion" exists from the average (mean, or
expected value). A low standard deviation indicates that the data points tend to be
very close to the mean; high standard deviation indicates that the data points are
spread out over a large range of values.
3.4.4 Weighted Percentile
The statistical method of percentile using weights would be used for analysis
according to following equation (3.4):
Percentile weight =∑ =1
5
i
(((Wi)(( xi)/ymax-sample type)*100.. Eq. (3.4)
There are 5 degrees for each criterion as mentioned above and each factor has
scale related to that degree. The weighted rank was found by equation (3.4)
• X is indicated to the number of respond for each degree in one factor.
• Wi is indicated to the quantitative measure as shown below:
Table 4 - Weight of Scale Points
Weight Importance Level
0 = w1 Unimportant
1 = w2 Slightly important
2 = w3 Important
3 = w4 Very Important
4 = w5 Critical
For clarity, consider the following example:
Looking at criteria factor P.1:

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Table 5 - Sample calculation for ranking
Scale Weight # of responses Sub Total
Unimportant 0 0 0
Slightly Important 1 3 3
Important 2 4 8
Very Important 3 12 36
Critical 4 15 60
Thus, the weighted percentage after applying equation 3.2 is 79%
3.4.5 Criteria Importance Determination
The design of questionnaire was based on the method of ranking importance of
factors as follows:
Table 6 - Criteria Importance
Range Importance Level
From 0 to 19 Unimportant
From 20 to 39 Slightly important
From40 to 59 Important
From 60 to 79 Very Important
From 80 to 100 Critical
Based on those criteria the major findings were analyzed to find the importance
of factors.
3.4.6 Ranking of Criteria
The ranking of the criteria is based on the weighted percentile. If two criteria
have the same percentile, then the lowest standard deviation is chosen. If the
standard deviation is similar, the mean is chosen.
3.5 Step 6: Building the AHP Model
The AHP decision process was developed by Thomas L. Saaty in the 1970’s. One
of its main applications is in group decision making. The process facilitates a group
of decision makers in finding one that best suits the identified goal based on the
understanding of the problem. It follows a comprehensive and rational framework

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in structuring the problem, quantifying the elements (i.e. Criteria), and their relation
to the overall outcome and for evaluating alternative solutions. The analytic
hierarchy process (AHP) model is structured through different phases; structuring
the problem, data collection and measurement, determination of priorities of both
main and sub-criteria and creating the final AHP Model.
3.5.1 Structuring the problem
A decision maker must first formulate the AHP model hierarchy. The hierarchy
will consist of the main goal, the criteria affecting such goal and the possible decision
alternatives. The goal or our decision is to enter into a joint venter or partnership
which will be beneficial to an organization financially and strategically. This goal
placed at the first level of the hierarchy as seen in Fig. 1. Through the literature two
main types of criteria have been identified in assessing the potential partnership;
Partner-related and Task-related criteria. These are considered as the second level
in the hierarchy model.
The third level consists of the selection sub-criteria that define the two main
types of criteria seen in the second level of the model. These selection sub-criteria
were identified from the literature review, and then subsequently circulated through
questionnaire to a group of professionals as explain in section 3 of this research.
Based on the finding from the completed questionnaires, the sub-criteria were
ranked based on percentile. The top 10 criterions were used in the AHP model.
Level 4 is the rating scale, as suggested by Liberatore, to be used for each
criterion when applying the model. The lowest level (level 5) of the hierarchy model
represents the decision or overall score.

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Figure1 - AHP model for the partner selection of a Joint Venture / Partnership
P.1
Level 3:
Sub-Criteria
P.2 P.3 P.4 P.5 P.6 P.7 P.8 P.10
P.9 T.1 T.2 T.3 T.4 T.5 T.6 T.7 T.8 T.10
T.9
Selecting a Joint venture / Partner
Level 1:
Goal
Partner-Related
Level 2:
Criteria Types
Task-Related
Level 5:
Decision X%
Level 4:
Rating Scale
(O) Outstanding (G) Good (A) Average (F) Fair (P)Poor

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3.5.2 Data Collection and Measurement
Once the model is developed, the criteria to be utilized in the model must be
identified. This was completed through the collection of data from selected
professionals and assigning pairwise comparisons to the main criteria and sub-
criteria identified for the AHP model. The sub-criteria to be used in the model were
identified through a questionnaire completed by professionals involved in such
decision making. The professionals were requested to evaluate the importance of
the sub-criteria as seen in section 3.2 above.
3.5.3 Determining Normalized Weights
Once the AHP model is constructed with the various levels and the sub-criteria
were evaluated and selected by the professionals, the decision maker must compare
the alternatives Aiand Aj with respect to the criteria in the level above. The
comparison is done using a scale from very important down to less important. A
different value is assigned to the scale from 1-9 which is adapted from Saaty and
seen in Table 7. The comparison of the sub-criteria levels were based on the Saaty
scale by using the difference in ranking of the top 10 sub-criteria. Whereas, the
number one ranked sub-criteria would be given a judgment of 9 as compared with
number ten ranked sub-criteria (10 – 1), and so on with all the other ranked sub-
criteria.
Table 7 - The Saaty Rating Scale
Level of
importance
Definition Explanation
1 Equal importance Two factors contribute equally to the objective
3
Somewhat more
important
Experience and judgment slightly favor one over the
other
5
Much more
important
Experience and judgment strongly favor one over the
other
7
Very much
important
Experience and judgment very strongly favor one over
the other. Its importance is demonstrated in practice.
9
Absolutely more
important
The evidence favoring one over the other is of the
highest possible validity.
2,4,6,8
Intermediate
values
When compromise is required

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Since n criteria of a level are evaluated together while using criteria from the
immediately higher level, an nxn comparison matrix is obtained. If the higher lever
includes m criteria then m matrixes will be created. In every matrix the diagonal
elements is always equal to one (aij=1) and two symmetrical elements are reciprocals
of each other (aji = 1/aij). Then the eigenvector is computed to get the priorities.
This is done by raising the pairwise matrix to powers that are successively squared
each time. The row sums are then calculated and normalized.
Given that there may be inconsistency with any decision makers judgments, a
matrix is only consistent if and only if aijx ajk = aik for all i, j, and k. This is done by
calculating the consistency index CI of the matrix using the equation:
=
ƛ
.. Eq. 5.0.1
Where, ƛmax,is the principal eigenvalue of the matrix.
The consistency index CI is in turn divided by the average random consistency
index RI to obtain the consistency ratio CR. As per Saaty the average random index
of sample size 500 matrices is shown in Table 8.
Table 8 - Random Consistency Index (RI)
n 1 2 3 4 5 6 7 8 9 10
RI 0 0 0.58 0.9 1.12 1.24 1.32 1.41 1.45 1.49
From the table the consistency Ratio, which is the comparison between
consistency index and random consistency index, is through the equation:
=

.. Eq. 5.0.2
If the value of the consistency ratio is smaller or equal to 10%, the
inconsistency is acceptable. Otherwise if the value is greater than 10%, the
subjective judgment would be revised.
After completing all the values, the matrix is normalized and local priority of the
criteria with respect to the higher level criteria is calculated. The overall priority of a
certain level is calculated by adding the products of the local priorities by the priority
of the corresponding criteria of the higher level. Then the overall priority of a certain

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level is used to calculate the local priorities of the level lower. This is then repeated
until the lowest level of the AHP model is reached.
CHAPTER 4: DATA ANALYSIS AND FINDINGS
This section covers the statistical analysis obtained from the completed research.
4.1 Questionnaire Response
The questionnaire was sent out to 50+ professionals in the identified sampling
sectors as mentioned in 3.3. A total of 34 responses were received giving a response
rate of 61.8%. The responses were as follows:
Table 9 - Questionnaire responses by market Segment
Market Segment
# of
Responses
Family owned company 15
Law Firm 2
Joint venture Company in
KSA
8
International Company
outside of KSA
9
TOTAL 34
Considering the low response rate from law firms, independent analysis will not
be taken into consideration as it would not be properly representative of the sample
sector.
Table 10 - Questionnaire responses by position
Position
# of
Responses
Business Development /
Sector Head
18
Owner / CEO / President 6
Finance / Commercial 8
Legal 2
TOTAL 34
The distribution of responses by position is considered representative of most
organizations whereas the majority of professionals working on JV’s are the business
developments and sector heads.

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4.2 Total Sampling
4.2.1 Mean, Mode, Standard Deviation
Table 11 - Partner Related Criteria Total Sampling (Mean, Mode, Standard Deviation)
# Criteria Mean Mode Standard Dev.
P.1 Partners Knowledge of local market 4.15 5 0.96
P.2 Trust between management teams 4.32 5 0.91
P.3 Reputation and identity of partner 4.21 4 0.69
P.4 Financial status/performance of partner 3.91 4 0.71
P.5 Size of partner 2.82 3 0.72
P.6 Prior JV experience and associations success 3.03 3 0.76
P.7
Ability to communicate and raise funds with local
financial institutions
2.82 3 1.00
P.8 Quality of partners management team 3.91 4 0.87
P.9
Harmony in business approach, goals, objectives,
aspirations, etc.
4.09 4 0.83
P.10 Enthusiasm and commitment to product/services 4.06 4 0.69
P.11 Ability to cover territory 3.50 4 0.79
P.12 Technical competence 3.59 3 1.16
P.13 Adequate staff to market effectively 3.69 4 1.06
P.14 Contacts in local market with all stakeholders 3.82 3 1.03
P.15 Complimenting customer base 3.15 3 0.87
P.16 Complimenting services, and distribution channels 3.15 3 0.89
P.17 Complimenting products and/or services 2.88 3 0.95
P.18
Willingness about transferring knowledge and
capabilities
3.85 4 0.74
P.19
Recommendations by banks, government, trade
associations, etc.
3.29 3 0.94

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Table 12 - Task Related Criteria Total Sampling (Mean, Mode, Standard Deviation)
T.1 Access to readily available distribution channels 3.32 4 0.94
T.2 Ability to obtain regulatory permits, licenses 4.35 5 0.81
T.3 Strong global/local footprint 3.50 4 0.90
T.4 Access to capital 3.48 4 0.83
T.5 Access to knowledge of local market/culture 3.82 4 0.85
T.6
Connection to government and non-government
organizations
3.71 4 1.03
T.7 Ability to mitigate industry risks 3.68 4 0.73
T.8 Ability to satisfy host government requirements 3.97 4 0.72
T.9 Obtaining managerial or labor skills 3.76 5 1.02
T.10 Planning and developing marketing techniques 3.53 4 0.90
T.11 Communication with financial institutions 3.03 3 0.83
T.12 Material procurement 3.06 4 1.17
T.13 Experience in service applications 3.18 4 1.04
T.14 Adequate staff to market effectively 3.59 3 0.92
T.15 RD technical resources 2.88 4 1.07
T.16 Technical capabilities of local partner 3.06 3 1.04
T.17 technical capabilities of international partner 4.12 5 1.15
T.18 Management ability and compatibility 4.06 4 0.78
T.19 Commitment to joint venture 4.71 5 0.52

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4.2.2 Percentile and Importance Determination
Table 13 - Partner Related Criteria Total Sampling (Percentile Importance Determination)
# Criteria Percentile Importance
Average
Percentile
P.1 Partners Knowledge of local market 79% Vi
69%
P.2 Trust between management teams 83% Cr
P.3 Reputation and identity of partner 80% Cr
P.4 Financial status/performance of partner 73% Vi
P.5 Size of partner 46% Im
P.6 Prior JV experience and associations success 51% Im
P.7
Ability to communicate and raise funds with
local financial institutions
46% Im
P.8 Quality of partners management team 73% Vi
P.9
Harmony in business approach, goals,
objectives, aspirations, etc.
77% Vi
P.10
Enthusiasm and commitment to
product/services
76% Vi
P.11 Ability to cover territory 63% Vi
P.12 Technical competence 65% Vi
P.13 Adequate staff to market effectively 63% Vi
P.14 Contacts in local market with all stakeholders 71% Vi
P.15 Complimenting customer base 52% Im
P.16
Complimenting services, and distribution
channels
54% Im
P.17 Complimenting products and/or services 47% Im
P.18
capabilities
71% Vi
P.19
associations, etc.
57% Im

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Table 14 - Task Related Criteria Total Sampling (Percentile Importance Determination)
Average
Percentile
T.1 Access to readily available distribution channels 58% Im
68%
T.2 Ability to obtain regulatory permits, licenses 84% Cr
T.3 Strong global/local footprint 63% Vi
T.4 Access to capital 60% Vi
T.5 Access to knowledge of local market/culture 68% Vi
T.6
Connection to government and non-
government organizations
68% Vi
T.7 Ability to mitigate industry risks 67% Vi
T.8
Ability to satisfy host government
requirements
74% Vi
T.9 Obtaining managerial or labor skills 69% Vi
T.10 Planning and developing marketing techniques 63% Vi
T.11 Communication with financial institutions 51% Im
T.12 Material procurement 50% Im
T.13 Experience in service applications 53% Im
T.14 Adequate staff to market effectively 65% Vi
T.15 RD technical resources 47% Im
T.16 Technical capabilities of local partner 51% Im
T.17 technical capabilities of international partner 78% Vi
T.18 Management ability and compatibility 76% Vi
T.19 Commitment to joint venture 93% Cr

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4.2.3 Top 10 Ranking
Table 15 - Partner Related Criteria Total Sampling (Top 10 Ranking)
# Criteria Rank
P.2 Trust between management teams 1
P.3 Reputation and identity of partner 2
P.1 Partners Knowledge of local market 3
P.9 Harmony in business approach, goals, objectives, aspirations, etc. 4
P.10 Enthusiasm and commitment to product/services 5
P.4 Financial status/performance of partner 6
P.8 Quality of partners management team 7
P.18 Willingness about transferring knowledge and capabilities 8
P.14 Contacts in local market with all stakeholders 9
P.12 Technical competence 10
Table 16 - Task Related Criteria Total Sampling (Tope 10 Ranking)
# Criteria Rank
T.19 Commitment to joint venture 1
T.2 Ability to obtain regulatory permits, licenses 2
T.17 technical capabilities of international partner 3
T.18 Management ability and compatibility 4
T.8 Ability to satisfy host government requirements 5
T.9 Obtaining managerial or labor skills 6
T.5 Access to knowledge of local market/culture 7
T.6 Connection to government and non-government organizations 8
T.3 Strong global/local footprint 9
T.10 Planning and developing marketing techniques 10

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4.3 Family Companies Sampling
Table 17 - Partner Related Criteria Family Sampling (Mean, Mode, Standard Deviation)
P.7
2.93 3 1.03
P.9
aspirations, etc.
4.00 4 0.93
P.18
capabilities
4.00 4 0.65
P.19
associations, etc.
3.33 4 0.98

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Table 18 - Task Related Criteria Family Sampling (Mean, Mode, Standard Deviation)
T.6
organizations
3.60 4 1.06

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Table 19 - Partner Related Criteria Family Sampling (Percentile Importance Determination)
Average
Percentile
P.1 Partners Knowledge of local market 65% Vi
70%
P.2 Trust between management teams 78% VI
P.7
48% Im
P.9
75% Vi
P.10
product/services
82% Cr
P.12 Technical competence 78% Vi
P.16
channels
53% Im
P.18
capabilities
75% Vi
P.19
associations, etc.
58% Im

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Table 20 - Task Related Criteria Family Sampling (Percentile Importance Determination)
Average
Percentile
75%
T.2 Ability to obtain regulatory permits, licenses 77% Vi
T.4 Access to capital 70% Vi
T.5 Access to knowledge of local market/culture 57% Im
T.6
65% Vi
T.8
requirements
75% Vi
T.9 Obtaining managerial or labor skills 80% Cr
T.10 Planning and developing marketing techniques 73% Vi
T.12 Material procurement 63% Vi
T.13 Experience in service applications 65% Vi
T.15 RD technical resources 67% Vi
T.16 Technical capabilities of local partner 67% Vi
T.17 technical capabilities of international partner 90% Cr
T.18 Management ability and compatibility 80% Cr

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Table 21 - Partner Related Criteria Family Sampling (Top 10 Ranking)
# Criteria Rank
P.12 Technical competence 3
P.13 Adequate staff to market effectively 9
Table 22 - Task Related Criteria Family Sampling (Tope 10 Ranking)
# Criteria Rank
T.7 Ability to mitigate industry risks 5
T.14 Adequate staff to market effectively 8
T.10 Planning and developing marketing techniques 9
T.4 Access to capital 10

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4.4 Joint Venture (IJV’s) Companies Sampling
Table 23 - Partner Related Criteria Joint Venture (IJV’s) Sampling (Mean, Mode, Standard Deviation)
P.7
2.88 2 0.99
P.9
aspirations, etc.
4.00 4 0.93
P.18
capabilities
3.88 4 0.64
P.19
associations, etc.
3.50 3 0.93

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Table 24 - Task Related Criteria Joint Venture (IJV’s) Sampling (Mean, Mode, Standard Deviation)
T.6
organizations
3.63 4 1.19

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Table 25 - Partner Related Criteria Joint Venture (IJV’s) Sampling (Percentile Importance Determination)
Average
Percentile
P.1 Partners Knowledge of local market 88% Cr
68%
P.5 Size of partner 34% Si
P.7
47% Im
P.9
75% Vi
P.10
product/services
69% Vi
P.12 Technical competence 53% Im
P.16
channels
59% Im
P.18
capabilities
72% Vi
P.19
associations, etc.
63% Vi

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Table 26 - Task Related Criteria Joint Venture (IJV’s) Sampling (Percentile Importance Determination)
Average
Percentile
T.1 Access to readily available distribution channels 66% Vi
66%
T.4 Access to capital 59% Im
T.5 Access to knowledge of local market/culture 69% Vi
T.6
66% Vi
T.7 Ability to mitigate industry risks 56% Im
T.8
requirements
69% Vi
T.9 Obtaining managerial or labor skills 69% Vi
T.10 Planning and developing marketing techniques 53% Im
T.12 Material procurement 53% Im
T.13 Experience in service applications 50% Im
T.15 RD technical resources 34% Si
T.16 Technical capabilities of local partner 31% Si
T.17 technical capabilities of international partner 81% Cr

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Table 27 - Partner Related Criteria Joint Venture (IJV’s) Sampling (Top 10 Ranking)
# Criteria Rank
P.13 Adequate staff to market effectively 5
P.11 Ability to cover territory 10
Table 28 - Task Related Criteria Joint Venture (IJV’s) Sampling (Tope 10 Ranking)
# Criteria Rank
T.14 Adequate staff to market effectively 9
T.1 Access to readily available distribution channels 10

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4.5 International Companies Sampling
Table 29 - Partner Related Criteria International Sampling (Mean, Mode, Standard Deviation)
P.7
2.56 3 1.13
P.9
aspirations, etc.
4.33 4 0.71
P.18
capabilities
3.67 4 1.00
P.19
associations, etc.
3.22 3 0.97

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Table 30 - Task Related Criteria International Sampling (Mean, Mode, Standard Deviation)
T.6
organizations
3.89 4 1.05

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Table 31 - Partner Related Criteria International Sampling (Percentile Importance Determination)
Average
Percentile
P.1 Partners Knowledge of local market 89% Cr
68%
P.7
39% Si
P.9
83% Cr
P.10
product/services
75% Vi
P.12 Technical competence 53% Im
P.13 Adequate staff to market effectively 42% Im
P.14 Contacts in local market with all stakeholders 81% Cr
P.15 Complimenting customer base 61% Vi
P.16
channels
50% Im
P.18
capabilities
67% Vi
P.19
associations, etc.
56% Im

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Table 32 - Task Related Criteria International Sampling (Percentile Importance Determination)
Average
Percentile
60%
T.3 Strong global/local footprint 58% Im
T.4 Access to capital 44% Im
T.5 Access to knowledge of local market/culture 86% Cr
T.6
72% Vi
T.8
requirements
78% Vi
T.9 Obtaining managerial or labor skills 53% Im
T.10 Planning and developing marketing techniques 56% Im
T.11 Communication with financial institutions 39% Si
T.12 Material procurement 25% Si
T.13 Experience in service applications 36% Si
T.14 Adequate staff to market effectively 47% Im
T.15 RD technical resources 25% Si
T.16 Technical capabilities of local partner 44% Im
T.17 technical capabilities of international partner 53% Im

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Table 33 - Partner Related Criteria International Sampling (Top 10 Ranking)
# Criteria Rank
P.11 Ability to cover territory 10
Table 34 - Task Related Criteria International Sampling (Tope 10 Ranking)
# Criteria Rank
T.6 Connection to government and non-government organizations 6
T.7 Ability to mitigate industry risks 7
T.1 Access to readily available distribution channels 8

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4.6 General Data Analysis of Results
4.6.1 Average Percentile
The average percentile for the total sampling shows that both partner and task
related criteria are nearly of equal importance. However, taking a closer look into
the sampling sectors, family owned companies showed a reasonably higher
importance on task related criteria. In contrary, the IJV’s and International
companies both scored the partner related criteria with reasonably higher
importance.
Table 35 - Summary of average percentile
Sample Sector Partner Related Task Related
Total 69% 68%
Family 70% 75%
IJV’s 68% 66%
International 68% 60%
4.6.2 Top Ranked Partner Related Criteria
There is a strong correlation between all sample sectors on partner related criteria
whereas 7 of 10 criteria’s are the same. However, within the top 10 criteria’s, there
is considerable difference in ranking for some criteria while other criteria are closely
ranked.
Table 36 - Partner related criteria ranking comparison
Ranking
# Criteria Family IJV’s International
P.1 Partners Knowledge of local market 10 1 1
P.10 Enthusiasm and commitment to
product/services
1 9 6
P.2 Trust between management teams 4 2 2
P.3 Reputation and identity of partner 2 3 4

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Based on the research, criterion “P.2 – Trust between management teams” is the
highest ranked over all the sample sectors. This indicates the importance to
transparency between the partners.
4.6.3 Top Ranked Task Related Criteria
Unlike partner related criteria, there are only 5 criteria which are ranked in the top
10 within all the sample sectors. Within the 5 criteria, the criterion “T.19 –
Commitment to joint venture” is highly ranked within all 3 sample sectors.
Table 37 - Task related criteria ranking comparison
Ranking
# Criteria Family IJV’s International
T.19 Commitment to joint venture 1 2 1
T.2 Ability to obtain regulatory permits, licenses 6 1 2
T.8 Ability to satisfy host government
requirements
7 6 4
T.18 Management ability and compatibility 3 7 5
The criterion “T.19” was ranked critical from all sectors and was the highest ranked
over all the sample sectors. Thus, it is clear from the research the importance of the
commitment of both partners to the joint venture and/or partnership. Although this
criterion is considered task-related, it should be understood as a general overall
commitment of each partner’s responsibility.

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4.7AHP Model Calculations
For each hierarchy level of the AHP model seen in Figure 1, a pairwise matrix is
developed to identify the priority for each item in the hierarchy.
Table 38 - Level 2 “Criteria Types” Pairwise Matrix
Goal Partner Task SUM Priority
Partner 1.00 1.471 2.47 60% ƛ max 2.00
Task 0.680 1.00 1.68 40% CI 0.0000
SUM 1.68 2.47 4.15 100% CR 0.00%
Whereas, ƛmax = (0.6x1.68)+(0.40x2.47) = 2.00; and the CR is less than or equal to 10%
which mean there is consistency in the judgment
For the five point rating scale at Level 3, the Liberatore Rating Scale was used
along with the Saaty pairwise rating scale in determining the pairwise judgment
matrix. Keeping in line with Liberatore, we assume the difference in importance
between two adjacent scales with respect to a specific scale is constant at 2 times.
Table 39 - Level 4 Liberatore Rating Scale Pairwise Matrix
Level 3 O G A F P Priority
O 1.00 3.00 5.00 7.00 9.00 51.3%
G 0.33 1.00 3.00 5.00 7.00 26.1%
A 0.20 0.33 1.00 3.00 5.00 12.9%
F 0.14 0.20 0.33 1.00 3.00 6.3%
P 0.11 0.14 0.20 0.33 1.00 3.4%
100%
Similarly, pairwise matrices for both the partner-related and task-related criteria
were created, a 10x10 matric for each main criteria type. The priority weights for
each criterion are then calculated along with the CR (for n=10, RI=1.49) to ensure
consistency in the responses. The difference in ranking of the criteria was used as
judgment of the importance of one criterion over the other. For example, partner-
related criteria ranked “1” is 9 times more important than criteria ranked “10” (i.e.
10 – 1 = 9). The same was used for all the other criteria’s to complete the pairwise
matrix based on the total sampling results seen in section 4.3.3 above. In both
matrices the CR=3.87% which is less than 10% and thus considered acceptable.

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Table 40 - Level 3 Partner-Related Sub Criteria Pairwise Matrix
Partner P.2 P.3 P.1 P.9 P.10 P.4 P.8 P.18 P.14 P.12 SUM Priority
P.2 1.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 46.00 23.7% ƛmax 10.5196
P.3 1.00 1.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 38.00 19.6% CI 0.0577
P.1 0.50 1.00 1.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 30.50 15.7% CR 3.87%
P.9 0.33 0.50 1.00 1.00 1.00 2.00 3.00 4.00 5.00 6.00 23.83 12.3%
P.10 0.25 0.33 0.50 1.00 1.00 1.00 2.00 3.00 4.00 5.00 18.08 9.3%
P.4 0.20 0.25 0.33 0.50 1.00 1.00 1.00 2.00 3.00 4.00 13.28 6.8%
P.8 0.17 0.20 0.25 0.33 0.50 1.00 1.00 1.00 2.00 3.00 9.45 4.9%
P.18 0.14 0.17 0.20 0.25 0.33 0.50 1.00 1.00 1.00 2.00 6.59 3.4%
P.14 0.13 0.14 0.17 0.20 0.25 0.33 0.50 1.00 1.00 1.00 4.72 2.4%
P.12 0.11 0.13 0.14 0.17 0.20 0.25 0.33 0.50 1.00 1.00 3.83 2.0%
Table 41 - Level 3 Task-Related Sub Criteria Pairwise Matrix
Task T.19 T.1 T.17 T.18 T.8 T.9 T.5 T.6 T.3 T.10 SUM Priority
T.19 1.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 46.00 23.7% ƛmax 10.5196
T.1 1.00 1.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 38.00 19.6% CI 0.0577
T.17 0.50 1.00 1.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 30.50 15.7% CR 3.87%
T.18 0.33 0.50 1.00 1.00 1.00 2.00 3.00 4.00 5.00 6.00 23.83 12.3%
T.8 0.25 0.33 0.50 1.00 1.00 1.00 2.00 3.00 4.00 5.00 18.08 9.3%
T.9 0.20 0.25 0.33 0.50 1.00 1.00 1.00 2.00 3.00 4.00 13.28 6.8%
T.5 0.17 0.20 0.25 0.33 0.50 1.00 1.00 1.00 2.00 3.00 9.45 4.9%
T.6 0.14 0.17 0.20 0.25 0.33 0.50 1.00 1.00 1.00 2.00 6.59 3.4%
T.3 0.13 0.14 0.17 0.20 0.25 0.33 0.50 1.00 1.00 1.00 4.72 2.4%
T.10 0.11 0.13 0.14 0.17 0.20 0.25 0.33 0.50 1.00 1.00 3.83 2.0%

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4.8 Creating the AHP Model
After having computed the normalized weights for of the AHP hierarchy, it is
required to create the model for the decision problem. All the weights of each
hierarchy are combined together to obtain global composite priority weights for all
the sub-criteria’s used in the second level of the AHP model.
Table 42 - Global weight for Sub-criteria
Level 1
Local
Weight
Level 2
Local
Weight
Global
Weight
Partner 60%
P.2 Trust between management teams 23.7% 14.1%
P.3 Reputation and identity of partner 19.6% 11.6%
P.1 Partners Knowledge of local market 15.7% 9.3%
P.9 Harmony in business approach, goals,
12.3% 7.3%
P.10Enthusiasm and commitment to
product/services
9.3% 5.5%
P.4Financial status/performance of partner 6.8% 4.1%
P.8Quality of partners management team 4.9% 2.9%
P.18Willingness about transferring knowledge
and capabilities
3.4% 2.0%
P.14Contacts in local market with all stakeholders 2.4% 1.4%
P.12Technical competence 2.0% 1.2%
Task 40%
T.19Commitment to joint venture 23.7% 9.6%
T.1Ability to obtain regulatory permits, licenses 19.6% 7.9%
T.17 Technical capabilities of international
partner
15.7% 6.4%
T.18Management ability and compatibility 12.3% 5.0%
T.8Ability to satisfy host government
requirements
9.3% 3.8%
T.9Obtaining managerial or labor skills 6.8% 2.8%
T.5Access to knowledge of local market/culture 4.9% 2.0%
T.6Connection to government and non-
3.4% 1.4%
T.3Strong global/local footprint 2.4% 1.0%
T.10Planning and developing marketing
techniques
2.0% 0.8%
Total 100%
After calculation of the global for each sub-criterion in level 3, they are re-
arranged into descending order of priority as seen in Table 43. Partner-related
criteria are seen as the most top ranked, the first ranked is “Trust between
management teams” followed by “Reputation and identity of partner”. The top

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ranked task-related criteria are shown to be “Commitment to joint venture” and
“Ability to obtain regulatory permits, licenses”.
Table 43 - Ranking of sub-criteria based on global weights
Criteria Global
Weight
P.2 Trust between management teams 14.1%
P.3 Reputation and identity of partner 11.6%
T.19 Commitment to joint venture 9.6%
P.1 Partners Knowledge of local market 9.3%
T.1 Ability to obtain regulatory permits, licenses 7.9%
P.9 Harmony in business approach, goals, objectives, aspirations, etc. 7.3%
T.17 technical capabilities of international partner 6.4%
P.10 Enthusiasm and commitment to product/services 5.5%
T.18 Management ability and compatibility 5.0%
P.4 Financial status/performance of partner 4.1%
T.8 Ability to satisfy host government requirements 3.8%
P.8 Quality of partners management team 2.9%
T.9 Obtaining managerial or labor skills 2.8%
T.5 Access to knowledge of local market/culture 2.0%
P.18 Willingness about transferring knowledge and capabilities 2.0%
P.14 Contacts in local market with all stakeholders 1.4%
T.6 Connection to government and non-government organizations 1.4%
P.12 Technical competence 1.2%
T.3 Strong global/local footprint 1.0%
T.10 Planning and developing marketing techniques 0.8%
Total 100%
The AHP model with the main criteria, sub-criteria along with the global weights
and five point rating scale can be used in any specific partner selection. The final
AHP model shown in Table 44 would be used where under the “Rating” and
“Priority” column a company would complete based on the five point rating scale (O)
Outstanding, (G) Good, (A) Average, (F) Fair, (P) Poor. This priority multiplied with
the global weights will give a final result for each sub-criteria and a final normalized
percentage score is calculated.

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Table 44 - Final AHP model
Main Criteria type
Global
Weight
(%)
GO or NO-GO
Sub-Criteria Rating
Priority
of Rating
x GW
(%)
Partner-Related
O,G,A,
F, P
P.2 Trust between management teams 14.1%
P.3 Reputation and identity of partner 11.6%
P.1 Partners Knowledge of local market 9.3%
P.9
7.3%
P.10
product/services
5.5%
P.4 Financial status/performance of partner 4.1%
P.8 Quality of partners management team 2.9%
P.18
Willingness about transferring knowledge
and capabilities
2.0%
P.14
Contacts in local market with all
stakeholders
1.4%
P.12 Technical competence 1.2%
Task-Related
T.19 Commitment to joint venture 9.6%
T.1 Ability to obtain regulatory permits, licenses 7.9%
T.17 technical capabilities of international partner 6.4%
T.18 Management ability and compatibility 5.0%
T.8
requirements
3.8%
T.9 Obtaining managerial or labor skills 2.8%
T.5 Access to knowledge of local market/culture 2.0%
T.6
1.4%
T.3 Strong global/local footprint 1.0%
T.10
Planning and developing marketing
techniques
0.8%
Total Score (out of 51%) X%
Total Normalized Score (out of 100%) X%
The final score can then be compared to the range in table 45 which is calculated
as per the cumulative priority percentage calculated from the pairwise comparison.
Table 45 - Final score range
Relationship Range of normalized score
Poor 0 to 4
Fair 4.1 to 10
Average 10.1 to 23
Good 23.1 to 49
Outstanding 49.1 to 100

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CHAPTER 5: CASE STUDY
In testing the model, one of the Vice Presidents within a local family group whom
participated in the research was requested to utilize the model for a current joint
venture which is in the final stages. The global weights were not provided to avoid
preference when rating the sub-criteria. The ratings and calculations were
computed as seen in below in table 46.
Table 46 - Case study response for AHP model
Main Criteria type
Global
Weight
(%)
GO or NO-GO
Sub-Criteria Rating
Priority
of Rating
x GW
(%)
Partner-Related
O,G,A,
F, P
P.2 Trust between management teams 14.1% G 26.1% 3.7%
P.3 Reputation and identity of partner 11.6% O 51.3% 6.0%
P.1 Partners Knowledge of local market 9.3% G 26.1% 2.4%
P.9
7.3% A 12.9% 0.9%
P.10
product/services
5.5% G 26.1% 1.4%
P.4 Financial status/performance of partner 4.1% G 26.1% 1.1%
P.8 Quality of partners management team 2.9% G 26.1% 0.8%
P.18
Willingness about transferring knowledge
and capabilities
2.0% A 12.9% 0.3%
P.14
Contacts in local market with all
stakeholders
1.4% G 26.1% 0.4%
P.12 Technical competence 1.2% A 12.9% 0.2%
Task-Related
T.19 Commitment to joint venture 9.6% G 26.1% 2.5%
T.1 Ability to obtain regulatory permits, licenses 7.9% A 12.9% 1.0%
T.17 technical capabilities of international partner 6.4% F 6.3% 0.4%
T.18 Management ability and compatibility 5.0% A 12.9% 0.6%
T.8
requirements
3.8% A 12.9% 0.5%
T.9 Obtaining managerial or labor skills 2.8% F 6.3% 0.2%
T.5 Access to knowledge of local market/culture 2.0% G 26.1% 0.5%
T.6
1.4% G 26.1% 0.4%
T.3 Strong global/local footprint 1.0% A 12.9% 0.1%
T.10
Planning and developing marketing
techniques
0.8% G 26.1% 0.2%
Total Score (out of 51%) 23.5%
Total Normalized Score (out of 100%) 45.8%

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Based on the normalized score “45.8%” in table 46, it can be reference against the
relationship range in table 45 whereas in this specific case the review of partnership
in study is considered “GOOD”. This outcome is mostly in line with the organizations
view of the joint venture considered for the study. However, it was highlighted that
the model is useful when considering a holistic view of the joint venture considering
both partners in the rating exercise as some criteria are more relative to the local
partner than the international partner.
CHAPTER 6: CONCLUSIONS AND RECOMMENDATIONS
6.1 Summary of the Study
Saudi Arabia being the booming market, many international organizations are
keen in setting up locally. The most common method of entering the Saudi market is
through joint ventures and partnerships. The two main criteria types were identified
along with the sub-criteria, where the top 10 based on the data analysis were used
to build an AHP based model, to facilitate companies in deciding whether to sign
with a specific partner or not as seen in Fig. 1. The final AHP model may be
applicable to any partnerships or joint ventures in Saudi Arabia. Table 44 can be
easily transferred into a spreadsheet to calculate the composite weights based on
the calculated global weights to determine the final score occupying the lowest level
of the AHP model hierarchy.
6.2 Findings
There seems to be a misconception with local family groups that international
partners look for local partners with access to capital. Rather, they are looking for
partners who will support the operations of the Joint Venture/Partnership through
the local knowledge, contacts and reputation. The data also clarifies that local family
companies look for partners that are management and technically strong, which
supports the business long term direction and sustainability.
Using the AHP model method for decision making, the criteria for joint venture
selection are clearly identified and the problem is systematically structured in a non-

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subjective manner. This allows the decision maker to evaluate the proposed
partner based on appropriate criteria, which was clear from the literature and
professionals are quite exhaustive. Furthermore, the AHP method significantly
reduces the time and effort in the decision making process and also provides
uniformity in a company’s decision making process.
6.3 Recommendations
From the results of the survey it is clear that both partner and task related
criteria are nearly as equally important in partnerships and joint ventures. Local
family groups in Saudi Arabia should rethink whether they want to be investment
partners which may have been the situation in the past, or if they wish to be
considered a developing business partner which shares equal commitment to the
joint venture. The expectations of each partner should be clearly expressed early on
considering that commitment to the JV and trust between the partners had been
ranked very highly as per the research. Furthermore, the study has identified which
criteria international companies consider in their partner selection as per table 31
and table 32. Thus, local partners should consider strengthening their capabilities to
satisfy those criteria’s such as “Obtain regulatory permits, licenses” and “Satisfy host
government requirements” positioning them as the partner of choice.
6.4 Going Forward
The AHP model was built on a total sampling of multiple companies in
developing a generic model for the total sampling. Based on the results of the case
study, it is proposed that separate AHP models be structured with the top 10 ranking
criteria based on the family or IJV’s/international sample results based on the type of
deciding organization. Moreover, organizations may also carry out the data
collection (i.e. questionnaire) exercise internally to structure an AHP model that is
based on sub-criteria priorities specific to the organization.

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REFERENCES
Tatoglu, E., (2000). “Western joint ventures in Turkey: strategic motives and partner
selection criteria.” European Business Review, 12(3) 137-147.
Al-Khalifa, A., and Peterson, S. E. (1999).“The partner selection process in
international joint ventures.”European Journal of Marketing, 33(11/12) 1065-
1081.
Onar, S. C., and Polat, S. (2009). “An AHP model for selecting strategic options.”
Ravanshadnia, M., Abbasian, H. R., and Rahaie, H. (2012).“Selecting engineering
partner for EPC projects using a fuzzy AHP approach.”International Journal of
Management Science and Engineering Management, 5(4) 277-283.
Varis, J., Kuivalainen, O., and Saarenketo, S. (2003). “Partner selection for
international marketing and distribution in corporate new ventures.”
Roy, J., and Oliver, C. (2009). “International joint venture partner selection: The role
of the host-country legal environment.” Journal of International Business Studies,
40, 779-801.
Hajidimitriou, Y. A., and Georgiou, A. C. (2002). “A goal programming model for
partner selection decisions in international joint ventures.” European Journal of
Operational Research, 138, 649-662.
Ulas, D. (2005). “Motives and partner selection criteria for formulation of IJVs in
high-technology industries in Turkey.”
Varis, J., Conn, S. (2002), “Alliance Partner Selection – A literature review.”Telecom
Business Research Center Laapeenranta.Laapeenranta, Finland.
Export Development Canada (2011). “Saudi Arabia, Infrastructure and
Environment.”EDC, Canada.
Export Development Canada (2011), “Saudi Arabia Economic.” EDC, Canada.
El Zayat, T. (2011), “Saudi Arabias 2012 Budget Report.” National Commercial Bank
NCB.

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Tam, M. C. Y., and Tummala, V.M.R. (2001), “An application of the AHP in vendor
selection of a telecommunications system.” The International Journal of
Management Science, Omega 29, 171-182.

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Appendix A – Research Questionnaire
• Important Note:
This questionnaire is a tool to collect data for a university research and will not be used for any other
reason. Please be aware that your answers will be confidential and only are used for conducting this
research. All personal information obtained through this research will remain confidential and will not
be disclosed under any circumstances unless you agree this information to be openly used.
• About the Questionnaire:
This questionnaire as part of the Master’s Degree research conducted in order to increase
understanding in the area of successful partner selection for Joint Ventures, and to define the
importance of selection criteria in partner selection.
• Contact Information:
Researcher: AusamahAlkhatib
Email: ausamahalkhatib@gmail.com
Ausamah.alkhatib@alturkigroup.com
Tel: +966 54 096 4110
University: King Fahd University of Petroleum and Minerals, Dhahran – Saudi Arabia
Program: Masters in Engineering Management
• Essential Questions:
Name:
Organization:
Division/Sector/Department:
Position:
Email:
• Definitions:
- Partner-Related Criteria: Variables that is relevant when choosing investment partner(s)
- Task-Related Criteria: Operational skills and resources that a venture requires for its
competitive success.
- AHP (Analytical Hierarchy Process): A structured technique for organizing and analyzing
complex decisions
• Please indicate to what extent you apply to the following criteria
1 Unimportant 2
Slightly
important
3 Important 4
Very
Important
5 Critical
• Example:
No. Criteria Rating Means
P.1 Partners Knowledge of local market 4 Very Important
Slightly
Important

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• Partner-Related Criteria
No. Criteria Rating
P.1 Partners Knowledge of local market 1☐ 2☐ 3☐ 4☐ 5☐
P.2 Trust between management teams 1☐ 2☐ 3☐ 4☐ 5☐
P.3 Reputation and identity of partner 1☐ 2☐ 3☐ 4☐ 5☐
P.4 Financial status/performance of partner 1☐ 2☐ 3☐ 4☐ 5☐
P.5 Size of partner 1☐ 2☐ 3☐ 4☐ 5☐
P.6 Prior JV experience and associations success 1☐ 2☐ 3☐ 4☐ 5☐
P.7
Ability to communicate and raise funds with local financial
institutions
1☐ 2☐ 3☐ 4☐ 5☐
P.8 Quality of partners management team 1☐ 2☐ 3☐ 4☐ 5☐
P.9 Harmony in business approach, goals, objectives, aspirations, etc. 1☐ 2☐ 3☐ 4☐ 5☐
P.10 Enthusiasm and commitment to product/services 1☐ 2☐ 3☐ 4☐ 5☐
P.11 Ability to cover territory 1☐ 2☐ 3☐ 4☐ 5☐
P.12 Technical competence 1☐ 2☐ 3☐ 4☐ 5☐
P.13 Adequate staff to market effectively 1☐ 2☐ 3☐ 4☐ 5☐
P.14 Contacts in local market with all stakeholders 1☐ 2☐ 3☐ 4☐ 5☐
P.15 Complimenting customer base 1☐ 2☐ 3☐ 4☐ 5☐
P.16 Complimenting services, and distribution channels 1☐ 2☐ 3☐ 4☐ 5☐
P.17 Complimenting products and/or services 1☐ 2☐ 3☐ 4☐ 5☐
P.18 Willingness about transferring knowledge and capabilities 1☐ 2☐ 3☐ 4☐ 5☐
P.19 Recommendations by banks, government, trade associations, etc. 1☐ 2☐ 3☐ 4☐ 5☐

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• Task-Related Criteria
No. Criteria Rating
T.1 Access to readily available distribution channels 1☐ 2☐ 3☐ 4☐ 5☐
T.2 Ability to obtain regulatory permits, licenses 1☐ 2☐ 3☐ 4☐ 5☐
T.3 Strong global/local footprint 1☐ 2☐ 3☐ 4☐ 5☐
T.4 Access to capital 1☐ 2☐ 3☐ 4☐ 5☐
T.5 Access to knowledge of local market/culture 1☐ 2☐ 3☐ 4☐ 5☐
T.6 Connection to government and non-government organizations 1☐ 2☐ 3☐ 4☐ 5☐
T.7 Ability to mitigate industry risks 1☐ 2☐ 3☐ 4☐ 5☐
T.8 Ability to satisfy host government requirements 1☐ 2☐ 3☐ 4☐ 5☐
T.9 Obtaining managerial or labor skills 1☐ 2☐ 3☐ 4☐ 5☐
T.10 Planning and developing marketing techniques 1☐ 2☐ 3☐ 4☐ 5☐
T.11 Communication with financial institutions 1☐ 2☐ 3☐ 4☐ 5☐
T.12 Material procurement 1☐ 2☐ 3☐ 4☐ 5☐
T.13 Experience in service applications 1☐ 2☐ 3☐ 4☐ 5☐
T.14 Adequate staff to market effectively 1☐ 2☐ 3☐ 4☐ 5☐
T.15 RD technical resources 1☐ 2☐ 3☐ 4☐ 5☐
T.16 Technical capabilities of local partner 1☐ 2☐ 3☐ 4☐ 5☐
T.17 technical capabilities of international partner 1☐ 2☐ 3☐ 4☐ 5☐
T.18 Management ability and compatibility 1☐ 2☐ 3☐ 4☐ 5☐
T.19 Commitment to joint venture 1☐ 2☐ 3☐ 4☐ 5☐

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